A shift in political leadership often brings regulatory changes, and the latest move by the National Labor Relations Board (NLRB) is a clear example. The agency has officially rolled back a Biden-era joint employer rule, reinstating a standard first introduced during former President Donald Trump’s administration in 2020.
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The updated rule significantly reshapes how joint employment is determined — a critical issue for contractors navigating relationships with subcontractors and labor forces across jobsites.
The joint employer rule defines when two separate companies can be held responsible for the same worker. In February, the NLRB finalized its decision to withdraw the broader 2023 standard and replace it with a narrower framework focused on direct control.
A federal judge had previously struck down the Biden-era rule, calling it “contrary to law” and “arbitrary and capricious,” preventing it from ever taking effect.
Under the reinstated rule, a company is considered a joint employer only if it exercises direct and immediate control over essential employment terms such as wages or working conditions. Legal experts say this marks a significant departure from prior interpretations.
“I think this offers way more clarity and really is in line with how the industry operates,” Rosenberg said.
Previously, the broader rule considered whether a company merely had the potential to influence employment conditions — even if that control was never exercised. That approach created uncertainty for construction firms, where general contractors typically oversee projects but do not directly employ subcontractor labor.
The construction industry, which relies heavily on subcontracting, is particularly affected by the rule change. Experts note that the new standard aligns more closely with long-standing industry practices.
“The Biden administration’s rule sort of put some of that in question and required and really led people to go back and look at their contracts and take even more formality to define things,” Rosenberg said.
Now, with the reversion, general contractors are less likely to be classified as joint employers unless they actively take control of subcontractor workers.
Still, legal professionals caution that contract clarity remains essential.
“The contract language has to track reality, not the other way around,” said Charles Krugel.
This means contractors must ensure their agreements accurately reflect on-site responsibilities and avoid situations where they unintentionally assume control over subcontractor crews.
Short also warned against stepping in too directly during project challenges:
“I’ve been on more than one construction project where a subcontractor’s superintendent or foreman is terrible — or even if they get sick or something — and someone on the GCs team is like, ‘Oh my God, forget it, I’m just going to do this,’” Short said. “They sort of effectively take control over the crew of the subcontractor. That would be a thing to be avoided.”
Such actions could still trigger joint employer liability under the new rule if they demonstrate direct control.
While the current rule offers clarity, experts agree it may not be permanent. Joint employer standards have shifted multiple times over the past decade, often reflecting the priorities of the sitting administration.
“It can’t just be sort of in-theory that maybe they could, maybe they can’t,” Krugel said.
Looking ahead, attorneys suggest the possibility of another reversal if political leadership changes again. Some propose that future regulations could carve out industry-specific exemptions, particularly for construction, where subcontracting is foundational.
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“I would suggest if they’re going to [reinstate a stricter joint employer rule], they should just define in it that construction’s exempted,” Rosenberg said.
The rule change comes at a time when the construction industry is already navigating labor shortages, rising costs, and increasing legal scrutiny. By narrowing the definition of joint employment, the NLRB may reduce compliance burdens for contractors — but it also places greater responsibility on firms to maintain disciplined project management practices.
For developers and general contractors, the takeaway is clear: while regulatory risk may be lower under the new rule, operational behavior on jobsites still matters. Exercising too much control over subcontractors could blur legal lines and expose firms to liability.
At the same time, the evolving regulatory landscape underscores the importance of staying agile. Contractors may need to revisit contracts, compliance strategies and workforce structures regularly to adapt to future rule changes.
Originally reported by Zachary Phillips, Editor in Construction Dive.
